The theme of the week is resistance.  Were it not for the Boston Marathon bombing and the timing thereof, it looked unlikely that bond markets would make much improvement beyond levels that had contained them.  Not only was there the tragedy, but it followed closely behind new military threats from North to South Korea and also coincided roughly with the impending bond pit close at 3pm.  The confluence of those events gave an unnatural push to volume and volatility.  The result was a Pyrrhic victory for bond markets, seeing their best levels of the day, but only after unimaginably awful news.  Even so, recent resistance remained firm:

1.678 is a familiar level in 10yr yields.  It was the original "all-time low" in late 2011 and was a prevalent pivot point through the end of 2012.  In addition to those horizontal considerations, it also rests almost precisely on a long term trendline seen in the following chart.  Taken together with the preceding chart, it seems like a serious warning for all those who've become complacent or content with the past three weeks of improvements that we still haven't definitively broken the trend (yellow lines), even though the possibility is very much alive.  In short, if we're not moving below 1.67+ today, then we're concerned, and are incrementally more so, as long as we continue staying above (but especially if we're also moving higher with the yellow trend line).

Then there's MBS...  Mortgages get a bit of a break from the epic, directional trendlines due to their starring role in QE3.  Things there are a bit more horizontal (though there's certainly a short term uptrend intact from late March) with something around 104-07 having caused the most significant hang-up through 1pm yesterday.  As such, moving higher into the 104-10's would be good, while a move lower back toward 104-00 would reinforce the resistance.

When it comes to reinforcing resistance (or helping challenge it), economic data has been particularly useless for the past three sessions.  Technicals and tradeflows haven't soundly trumped fundamentals.  This is easy to see in hindsight, but predictions are challenging (especially about the future).  Tuesday brings Consumer Prices, Housing Starts, and Industrial Production.  Any of these reports would have to be far out of bounds in order to have a material effect on trading levels.  So with said levels so close to resistance, we're very much in a "wait and see" mode--fingers crossed for breaks, but guarded against bounces.